Posted on 02/12/2025 8:34:39 AM PST by ducttape45
INDIANAPOLIS — Mike Braun has made tax relief a priority this legislative session. One way he wants to do that is by phasing out the tax on retirement income.
Dr. Matthew Will, Associate Professor of Finance at the University of Indianapolis, says Indiana has a good track record of low taxes.
"You do pay an income tax, that's 3% plus your county tax, which is the normal rate in Indiana,” Will said. “So, retirees do have to pay that."
Gov. Braun’s budget proposal would phase out the tax on retirement income over the next four years.
"Sometimes it's a question of whether you buy medicine or food so an extra hundred dollars would enable them to perhaps do both,” Ralanda Smallfelt, the General Manager of Seniors Helping Seniors, said. “So it would be very important."
Seniors Helping Seniors is an in-home care company. They help the elderly population age in place, meaning they stay in their home rather than going to a nursing home or assisted living facility.
Smallfelt says a change like this would benefit retirees on a fixed income.
"It's a great step in the right direction. It's not a win solution for everybody but it will help,” Smallfelt said.
a According to data from the U.S. Census Bureau, in 2020, Indiana had a population of approximately 6.7 million people, with over 15% of the population being over the age of 65, making it one of the top states with a large retirement population.
While the average age of retirement remains the same, some retirement ages are continuing to work.
"I plan to work as long as I can. I don't really have an actual age right now,” Patricia Thillson, an employee of Seniors Helping Seniors, said. “I am just planning as long as I am healthy enough to work I will so I can save money."
Thillson is a 73-years-old. While she isn't retiring any time soon, she says this move will be beneficial.
"Anything is helpful and any kind of tax cut you can get on your retirement, IRA, or whatever is going to be helpful in that way,” Thillson said.
Right now, the state of Indiana taxes all income, according to AARP.
The expert we spoke with says allowing retirees to keep more of their income won’t have a major impact on the state.
"Retirees are on fixed incomes to begin with so to reduce their tax burden is going to be huge for them and it's not really going to hurt the state very much to give them a few extra dollars,” Will said.
Gov. Braun also proposed adding tax holidays for all Hoosiers and eliminating the tip tax. His budget plan will need approval from lawmakers at the statehouse.
Has anyone else seen this? My daughter pinged me on it this morning, and the article came out last month, but this is the first I've heard of it and there is no mention of exactly what "retirement" income he's talking about. Indiana doesn't tax social security, but it does tax my government retirement.
I've been looking at other states that don't tax either and so far Iowa is at the top of my list of states to relocate to if Indiana continues to do things that drive away retirees.
Thoughts?
No income tax on SS benefits ever.
I don’t know. I would rather see my property taxes reduced.
I’m cynical. They may remove the tax on retirement income, but they’ll add a “fee” somewhere else and say that fee is not a tax.
Nowhere in the article is the political party of the governor mentioned.
Of it’s not needed as no Democrat would reduce taxes.
Left that place for TX 14 years ago. Don’t miss it.
Well, Illinois does not tax any Social Security retirement income.
Indiana does not tax social security either.
I agree. I would rather have property taxes reduced—that disproportionately affects retirees on a fixed income.
Well, Indiana has been reducing income taxes, but very, very slowly.
Yes, my property taxes and insurance keep going up each year with no end in sight. And being Indiana, we are really not one of the higher taxed states.
Michigan taxes SS and retirement income. They then waste the money on stupid stuff and demand ANOTHER tax for the roads that “shiny face” promised to fix when she ran as governor.
Our only saving grace is that the state does not tax food.
Indiana doesn’t tax grocery food either.
Indiana does tax IRA, 401(k) and pension income.
Illinois does not tax those.
While it sounds nice, some negatives:
1. Did the retiree vote for increased taxes that they will now not have to pay?
2. Will they now vote for tax increases because it doesn’t impact them.
If you don’t have skin in the game you shouldn’t have a say.
Just yesterday I told my daughter “Never ever vote for a tax increase, even if children are going to starve and die, it’s all fraud.”
Braun is also pushing a bill that reduces property tax. The teachers unions are screaming about how it will gut public education.
Wasn’t aware of that, thanks.
INTERESTING-—
SEEMS TO ME THE TEACHERS UNIONS GUTTED EDUCATION
What about Indiana property tax? Do retirees have have to pay that & if so, how much isit?
I always thought if you are retired and kids are grown you don’t pay anymore on your home (you pay on investment property for income). Businesses pay because the investing in the future employees.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.